Cresencia v. Kim, 15593
| Citation | 878 P.2d 725,10 Haw.App. 461 |
| Decision Date | 02 August 1994 |
| Docket Number | No. 15593,15593 |
| Parties | Jean B. CRESENCIA, Juliana A. Cresencia, Candida B. Cresencia, Perla C. Gamboa, Emma B. Cresencia, Veronica B. Cresencia, Manuel B. Cresencia, Plaintiffs-Appellees, v. Robert Y.H. KIM, Sr., and Rebecca B. Kim, Defendants-Appellants, and Robert M. Takeuchi and Malia Enterprises, Defendants. |
| Court | Hawaii Court of Appeals |
Syllabus by the Court
1. HRCP Rule 9(b), which requires that "[i]n all averments of fraud ... the circumstances constituting fraud ... shall be stated with particularity[,]" is designed, in part, to ensure that a defendant is provided with the particularized information necessary to prepare an effective defense to a claim which embraces a wide variety of potential conduct. Thus, under Rule 9(b), general allegations of "fraud" are insufficient because they serve little or no informative function. Rather, a plaintiff must state the circumstances constituting fraud or mistake with particularity (e.g., allege who made the false representations) and specify the representations made.
2. The purpose of HRCP Rule 15(b) is to allow an amendment of the pleadings to bring the pleadings in line with the actual issues upon which the case was tried, and to thus promote the objective of deciding cases on their merits rather than in terms of the relative pleading skills of counsel or on the basis of a statement of the claim or defense that was made at a preliminary point in the action and later proves to be erroneous.
3. HRCP Rule 15(b) is not permissive. As long as issues are tried by the express or implied consent of the parties to a lawsuit, the issues shall be treated as if raised in pleadings.
4. Express consent to try an issue not raised in the pleadings may be found in a stipulation or a pretrial order.
5. Consent to trial of an issue not raised in the pleadings is generally implied when an opposing party fails to object to the introduction of evidence relevant to an unpleaded issue or actually produces evidence bearing on the new issue. However, a party's failure to object will not constitute implied consent unless the party had notice that the evidence was being introduced to prove the unpleaded issue. Furthermore, consent will not be implied if a party will be substantially prejudiced by an amendment of the pleadings to include the unpleaded issue.
6. When the evidence that is claimed to show that an issue was tried by consent is relevant to an issue already in the case, as well as the one that is the subject matter of a motion for a Rule 15(b) amendment, and there was no indication at trial that the party who introduced the evidence was seeking to raise a new issue, the pleadings will not be deemed amended under the first portion of Rule 15(b). The reasoning behind this view is that if evidence is introduced to support basic issues that already have been pleaded, the opposing party may not be conscious of its relevance to issues not raised by the pleadings unless that fact is made clear.
7. Traditionally, the remedy for breach of a contract is the recovery of out-of-pocket losses. That is, one who sustains a loss by breach of a contract is entitled to have just compensation commensurate with his or her loss and only such damages as will actually or as precisely as possible compensate the injured party. Therefore, damages for emotional or mental distress are not ordinarily recoverable for breach of a contract.
8. Where a contract is breached in a wanton or reckless manner so as to result in a tortious injury, the aggrieved person is entitled to recover in tort, and thereby recover damages for emotional distress and disappointment in addition to damages for out-of-pocket losses.
9. The only damages generally recoverable for claims of fraud or deceit are pecuniary damages; i.e., damages which will put the plaintiff in the position he or she would have been had he or she not been defrauded and which can be accurately calculated in monetary terms such as loss of wages and cost of medical expenses. The measure of pecuniary damages is usually confined to either the out-of-pocket loss or the benefit of the bargain, and as a result, there may be no recovery for mental anguish and humiliation not intentionally inflicted.
Philip L. Lahne (Neeley & Anderson, of counsel), Diane K. Taira, with him on the briefs (Dinman, Nakamura, Elisha & Lahne, of counsel), Honolulu, for defendants-appellants.
Gregory T. Grab, on the brief, Honolulu, for plaintiffs-appellees.
Before BURNS, C.J., and HEEN and WATANABE, JJ.
This appeal involves a dispute over a sub-agreement of sale, by which Plaintiffs-Appellees Jean B. Cresencia (Jean), Juliana A. Cresencia (Juliana), Candida B. Cresencia, Perla C. Gamboa, Emma B. Cresencia, Veronica B. Cresencia, and Manuel B. Cresencia (collectively, Cresencias) purchased from Defendants-Appellants Robert Y. H. Kim, Sr. (Kim Sr.) and Rebecca B. Kim (collectively, Kims) a 5.307-acre parcel of land in Kalihi Valley, Hawai'i (subject property).
The Cresencias, who are all related by blood or marriage, had purchased the subject property with the intention of building several houses on it, so they could all live next to each other. Several months after the purchase, however, they discovered that the subject property had been downzoned by the City and County of Honolulu (County) to P1- Preservation land and could no longer be used for their intended purposes. Additionally, the Cresencias learned, when they were named as defendants in a foreclosure lawsuit, that the Kims had defaulted on their master agreement of sale for the subject property and were thus in jeopardy of forfeiting their interest in the subject property.
The Cresencias thereafter ceased making payments under the sub-agreement and filed this lawsuit against the Kims for breach of contract and fraud. After a jury-waived trial, the Cresencias were awarded $156,646.50 in breach of contract damages, interest, attorneys' fees, and costs, as well as emotional distress damages totaling $135,000. 1 Additionally, a deficiency judgment that had earlier been entered in favor of the Kims on their counterclaim against the Cresencias was vacated.
The Kims timely appealed the circuit court's judgment, as well as numerous orders entered by the circuit court, arguing that: (1) the circuit court improperly concluded that the Kims had breached the sub-agreement by defaulting on their master agreement of sale; (2) the circuit court erroneously concluded that fraud had been proved; (3) the circuit court should not have imputed the fraudulent conduct of the Kims' son, Robert Y. H. Kim, Jr. (Kim Jr.), to the Kims; (4) the circuit court improperly awarded the Cresencias damages for emotional distress, since the Cresencias neither pleaded nor tried the issue of emotional distress damages; (5) the circuit court should not have awarded damages on both the fraud and breach of contract counts since that action was tantamount to giving the Cresencias a double recovery; (6) the circuit court improperly vacated the deficiency judgment previously entered against the Cresencias; and (7) the circuit court had no authority to order that if the deficiency judgment against the Cresencias were confirmed by an appellate court, the Cresencias were entitled to an award of damages equal to the amount of the deficiency judgment.
We conclude that the award of emotional distress damages to the Cresencias was improper in this case and, accordingly, vacate said award. In all other respects, we affirm the joint and several judgment and the remaining orders from which this appeal was taken.
On April 29, 1981, the Kims and Spectrum Properties, Inc. (Spectrum) entered into an Agreement of Sale (Master Agreement) to purchase the subject property for $170,000 from Robert Takeuchi (Takeuchi) and Malia Enterprises (Malia), a Hawai'i limited partnership. Kim Jr., who was Spectrum's president and major shareholder, signed the Master Agreement on behalf of the Kims and Spectrum.
Kim Jr. indicated that the subject property was initially acquired with the intention of subdividing and developing it. Deposition (Depo.) Kim Jr. 11/21/86, [10 Haw.App. 466] at 14. 2 However, these plans were abandoned when the County Board of Water Supply, because of water restrictions in the Kalihi Valley area, refused to allow water service to more than one single-family residential unit on the subject property. Id. at 15-17.
Kim Sr., on the other hand, testified that he learned from Kim Jr. about the water restrictions on the subject property prior to its purchase. He nevertheless went ahead with the purchase, hoping that the water situation might subsequently change, allowing the subject property to be subdivided and developed. Transcript (Tr.) 7/3/91, at 140-51.
Shortly after purchasing the subject property, the Kims and Spectrum fell behind on their payments. After Takeuchi complained in a letter about the constant late payments, the Kims and Spectrum began a search for another buyer for the subject property. Since Kim Jr. was a licensed real estate broker, the Kims gave him full authority to advertise and negotiate the terms for the sale of the subject property, subject to their final approval.
Kim Jr. subsequently placed an advertisement for the sale of the subject property in the local newspapers, and listed the subject property with The Investment Group, Realtors (TIGR) Listing Service and the Honolulu Board of Realtors Multiple Listing Service. The TIGR property listing stated that the subject property was "broker owned," and that the owner no longer wanted the subject property because of a "change of plans." Plaintiffs' Exhibit 28. The listing also noted that a "house, condos services" could be added to the subject property and that it was "possible to develop" the subjectproperty. Id.
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